licensing – StartupNationhttps://startupnation.com
Build Your Business. Live Your Dream.™Fri, 09 Dec 2016 15:02:01 +0000en-UShourly1Four Things to Include in Every Licensing Agreementhttps://startupnation.com/manage-your-business/four-things-include-every-licensing-agreement/?utm_source=rss&utm_medium=rss&utm_campaign=four-things-include-every-licensing-agreement
Wed, 01 Jul 2015 10:00:29 +0000http://www.startupnation.com/?post_type=articles&p=18452When looking at exclusivity consider which markets will be included in the agreement., then go for it!

Licensing Agreements: Using factors that can work in your favor

Creating a licensing framework is a complex process because everyone involved wants to benefit from the arrangement. In my experience, you can best protect your intellectual property if you craft the agreement in such a way that you are paid a commensurate amount of money for your idea while establishing clear understandings about business terms such as exclusivity, geographic and vertical market restrictions and how your partners intend to produce and use the idea.

Basically, licensing is giving another company permission to produce and sell your product. You provide the idea, they provide the manpower. For small companies, licensing is a good way to stay focused on core competencies and generate a revenue stream without diverting attention toward building a sales network, distribution channels or manufacturing. In my business, licensing has allowed me to put measurement tools in places where they have never been before, and I’ve been able to do it faster and cheaper than if I had to do it on my own.

When creating the framework for a licensing agreement, the first thing is to be realistic about what your intellectual property is worth to the marketplace. A common mistake I’ve seen is that people tend to overvalue their ideas. While it’s natural to want a price based on what you think the idea is worth, the price tag also depends on what others think it’s worth. If the idea is something that partners or customers “must” have, then you’re in a stronger position to get premium pricing. For a company to consider an idea a “must” have it should do something cheaper, faster or better, or enable a larger system to operate. Think of this in terms of your car. You must have an engine in order to operate your car, so someone with an engine design can get a higher price for that design. Alternatively, electronically operated mirrors are something that are nice to have but do not impact the ability for you to drive the car. While it’s a convenient feature, this mirror design will not get has high a price as the engine design.

In addition to determining the fee, a solid licensing framework spells out how that fee will paid. In some cases, it makes sense to negotiate a lump sum for a predetermined amount of time. For example, I may ask for a flat fee of $5,000 per year or $500 per month. Other situations may call for a royalty, or payment per unit. In this case, I may be paid ten cents per unit. This is the most common type of deal. There are some instances where it makes sense to combine these options, such as an agreement to pay $10,000 per month or $1.00 per unit based on whichever value is greater.

Another thing to consider within the framework of your licensing agreement is exclusivity. When looking at this option, think about whether or not you would rather work with a single partner or multiple partners.

Other companies may want to be the one and only partner to manufacture and distribute your idea. In this type of worldwide exclusive agreement, you want to be sure that you are getting paid a higher fee for the loss of additional revenue streams, as well as put some performance checkpoints in place that will protect you if the partner does not live up to expectations.

When looking at exclusivity, you may also consider which markets will be included in the agreement. This can be broken down a few different ways. The first is geographic exclusivity. Essentially, you are granting a partner the right to produce and distribute your idea within specific states, regions or countries. I like these types of agreements because they provide multiple revenue streams and allow me to work with multiple partners.

You can also work on industry-specific or vertical exclusivity. In other words, the framework allows you to work with partners in various industries. A great example of this is what MarqMetrix is doing with its Performance Ball Probe. This state-of-the-art measurement tool is available to a wide range of industries, including food and agriculture, oil and gas and pharmaceuticals, and this broader range of partners has created multiple revenue streams.

In all agreements, you want to ensure the long-term protection of your intellectual property. One way to accomplish this is to spell out exactly how the technology or idea will be used by each partner. Will the idea be produced and integrated as a standard component of a larger system?

Adding performance checkpoints into the framework is another way to provide long-term protection for your idea. I like to add six month checkpoints into my agreements, as this provides an opportunity to evaluate sales performance and make any necessary modifications. It’s an added level of accountability for my partners and gives me a way to terminate agreements that are not working out as anticipated.

Creating a licensing agreement that works for you and your partners will require a great deal of thought and patience. You can expect to see numerous revisions before the final version is signed. However, being mindful of the factors that can work in your favor from the very beginning of the negotiation process will put you in a much better position to leverage and protect your intellectual property for many years to come.

]]>What do I need for a start-up?https://startupnation.com/start-your-business/plan-your-business/need-start/?utm_source=rss&utm_medium=rss&utm_campaign=need-start
Wed, 10 Dec 2014 16:10:12 +0000http://www.startupnation.com/?post_type=articles&p=15038Learn more about which financial options are available to you to ensure that your business has the best chance of weathering any storms and paramount to getting ahead and staying there.

What do I need for a start-up business?

A financial checklist

Venturing out and starting your own business can be a dream come true, and being aware of what you can do to help your business thrive is an essential part of being an entrepreneur. According to government statistics, around 127,000 new small to medium businesses were registered in the UK last year, employing over 14 million people and covering 59% of private sector employment. In the U.S. there are almost 28 million small businesses and of those over 22 million are self- employed with no additional payroll or employees (these are called nonemployers). This recent growth, more than in recent years, means many new entrepreneurs will be in the know with what’s available to help them.

The resurgence of new businesses following the stagnation of the late 2000’s will throw many in at the deep end of what you need to stay afloat financially. The ability to keep your books in the black and stay on track isn’t down to an entrepreneurial spirit; it’s down to knowing what options you have. We’ve compiled a guide to some of the lesser known financial solutions and legal routes to take to help get you started and keep your new business afloat.

Your vision – A robust but realistic business plan

All businesses need a plan, especially to raise funds from banks or investors. Whilst keeping it clear and concise you must be realistic in your expectations as your financial manager will be happy to see you veer on the cautious side rather than being too optimistic. Explain the background to your idea, including what you’ve done between coming up with the idea and writing the plan, what work you’ve done for the business so far and any related career experience which could help with your new venture. Getting these points across will help the bank to build a picture of you and what your business offers.

Remember to differentiate your product or service from the competition, explain exactly what it is and how you will be able to adapt to customer or market demands. Financial forecasts, “what if” scenario contingencies, supplier information and target customers are also important aspects to go over. If you don’t feel like writing one from scratch, there are templates and planners on business banking sites that can take the stress out and give you a helping hand.

Register (Including Licensing) – Make your business legal

You will need to register your company with Companies House, the registrar of companies in the UK. This is quick and easy to do but you need to check that the name is pronounceable, isn’t already taken and isn’t too similar to other local businesses. Additionally, you may want to register your trademark or the name your business will be trading under, if it is not the name of the company. You may also need to obtain various operating licenses (for the US) depending on the type of business you are operating.

Other tasks include preforming a fire risk assessment. You must do this yourself with the aid of a guide (US) but advice can be sought from local fire and rescue authorities. And don’t forget to decide on your place of business, is it home based or are you renting an office? These need to be updated in your legal files.

Who’s the boss? Determine the ownership structure

It is important to lay out exactly how the company is going to be legally structured. Detail how many owners there are, how personal liability will be limited in the event of a claim or debt and how the structure will affect taxes. In general, incorporating is the best means of limiting liability but some of the main types are a Sole Trader, a Partnership and Limited Company.

If you start working for yourself, you’re classed as a self-employed sole trader, meaning you are responsible for the whole business – you don’t actually have to work alone.

A partnership involves personally sharing responsibility for the company – each partner will pay tax on their share of the profits whilst still being liable for any losses or bills the business encounters.

Limited Companies are organizations that run your business – they are responsible for everything they do and their finances are separate to your personal finances. This means that any profit made is owned by the company which can then be shared after it has paid Corporation Tax.

More in-depth information about this can be found on the gov.uk website or at the SBA.gov, U.S. site.

Get insured – especially if you’re vehicle based

Amongst the most important costs to be factored in is insurance. You need to cover both the business and a vehicle against as many potential risks as possible, especially if you’re dependent on being mobile. You’re going to want Guaranteed Asset Protection insurance. Most frequently bought in conjunction with a vehicle, it also is beneficial when signed up to a long-term contract hire arrangement.

With this insurance policy you are guaranteed that if your vehicle is written off or stolen, you will get the full price you paid for it back and save you or your business going into negative equity. On average, a new vehicle loses 60% of its value after three years and specialist insurers will generally not pay out more than they deem the vehicle to be worth at the time of the incident, so this can be valuable in recouping all of your lost capital.

Surviving the payment terms – invoice factoring

If you’ve shipped your first order but are waiting on payments you may be limiting your growth potential and missing out on additional business. Even chasing late payments can be costly for new businesses when access to liquid capital is difficult. Help can arrive in the form of invoice factoring, and this can release up to 90% of the value of invoices at short notice.

The remainder of the invoice amount is paid after the payment is collected minus some fees as the service provider, usually a bank, will take on the invoice and collect it. Once the factoring has taken place there is nothing more for your business to worry about. This can be handy with late invoices where the investment in recouping the capital may outweigh the immediate needs of the business.

By learning more about which financial options are available to you, you will ensure that your business has the best chance of weathering any storms. Mentioned above are just some of the essential questions to ask that new businesses encounter in their infancy. Extensive research is paramount to getting ahead and staying there.

]]>Can You Earn Royalties On Your Invention?https://startupnation.com/start-your-business/launch-your-invention/can-you-earn-royalties-on-your-productinvention/?utm_source=rss&utm_medium=rss&utm_campaign=can-you-earn-royalties-on-your-productinvention
https://startupnation.com/start-your-business/launch-your-invention/can-you-earn-royalties-on-your-productinvention/#respondFri, 25 Jun 2010 00:18:51 +0000http://www.startupnation.com/blogs/?p=4755Believe it or not, it’s not as hard as you may think to land a royalty deal on a product invention…provided you have a truly “good” idea to start with, and you have some important steps completed before approaching companies. To begin, let me step back and explain what I mean by “royalty deal”, which...

Believe it or not, it’s not as hard as you may think to land a royalty deal on a product invention…provided you have a truly “good” idea to start with, and you have some important steps completed before approaching companies.

To begin, let me step back and explain what I mean by “royalty deal”, which is more commonly referred to as a Licensing Agreement.

If you aspire to earn royalties from your invention, then the typical arrangement would be to secure a License Agreement with an interested company.A License Agreement is the legal document between an inventor [licensor] and a third party [licensee] which defines specific terms by which the licensee can commercially use the licensor’s invention.Among other things, the Agreement will define a time period, royalty rate, payment schedule, cash advance, minimum annual payments, etc.As a result of the Agreement, the inventor may receive an ongoing payment calculated as a percentage of sales (called a “royalty”), or a one-time lump-sum payment.

Another option would be for an inventor to assign his rights, which is essentially the process of transferring or selling ownership in the invention/patent. The inventor may receive a lump sum payment or a series of payments. The difference between a “license” and “assignment” is in the transfer of rights. With a license, the inventor retains rights, like “renting” the patent, and with an assignment they transfer their rights (i.e., sell it).

In addition to having a good idea there are other considerations when preparing your invention for license, such as intellectual property protection (i.e.: patent, trademark or copyright), development and presentation.

It is important to understand that manufacturing your idea is NOT a requirement to license your invention for royalties.Many inventors believe that they need to setup manufacturing to pursue their inventions, which is not true.If your goal is to license your invention for royalties, I would not advise going down the path of setting up manufacturing capabilities.Assuming you have a good invention to start, you can approach companies about licensing your invention with a patent application filed, a prototype or design in place and a reasonably good presentation on why they should license your invention.

In summary, it is very possible to license a good invention for royalties.My company, InventionHome has completed over 100 marketing/license agreements and we’re seeing tremendous interest in new and innovative products.

]]>https://startupnation.com/start-your-business/launch-your-invention/can-you-earn-royalties-on-your-productinvention/feed/0Is Your Brand Ready For Fame?https://startupnation.com/start-your-business/plan-your-business/is-your-brand-ready-for-fame/?utm_source=rss&utm_medium=rss&utm_campaign=is-your-brand-ready-for-fame
https://startupnation.com/start-your-business/plan-your-business/is-your-brand-ready-for-fame/#commentsTue, 03 Mar 2009 11:00:22 +0000http://www.startupnation.com/blogs/?p=4382In the late 60’s Andy Warhol proclaimed his belief that everyone was destined for at least 15 minutes of fame. While the definition of “fame” may be up for interpretation, the prediction does hold some truth. It also begs a question for companies. Will your brand be ready? If yes, your 15 minutes could easily...

In the late 60’s Andy Warhol proclaimed his belief that everyone was destined for at least 15 minutes of fame. While the definition of “fame” may be up for interpretation, the prediction does hold some truth. It also begs a question for companies. Will your brand be ready? If yes, your 15 minutes could easily translate into a lifetime of fame for you and your company. If not, your company may just as easily fade into the shadows of media’s clutter. To ensure your brand’s fame lasts a lifetime, follow these tips to a picture perfect media close-up.

Tip: Understand What Branding IS (and isn’t)

Branding isn’t just your logo or fancy company letterhead. Branding goes much deeper. Understanding this is the crucial first step to becoming memorable in your customers’ minds. Ultimately, branding is how THEY feel about your company, NOT what YOU want them to feel. Brand Identity, on the other hand, is the logo and fancy company letterhead. Be aware of the difference.

Tip: Anything Can Be a Brand

Don’t fall into the trap of thinking that your product or service can’t be branded. The truth is that anything can be branded. For example, let’s take a look at water. Water is a naturally occurring resource and even it has hundreds, if not thousands, of different brands available. If water can do it, your tax filing service can as well. Find what makes your product or services different and share it with the world through branding.

Tip: Branding Isn’t Just For Blue Chips

Branding is an integral marketing tool for all companies. This includes start-ups, established companies, and especially companies attempting a comeback. Whether you are big or small, branding should be a top priority. Branding helps you break free from a cluttered marketplace by encouraging brand awareness, recognition, and ideally preference. Successfully completing this cycle will take your product from the store shelf to the checkout lane.

Tip: Effective Branding = Additional Revenue Streams

A successful branding program can lead to opportunities for additional revenue streams. One of the most popular examples of this is licensing. Licensing is the leasing of a trademarked brand identity to another company for the purpose of creating additional products or services. The brand owner then receives a royalty, or percentage of sales, in exchange for the brand usage. This strategy has been highly effective for brands such as Harley Davidson, Marvel Comics, and Disney. Why not add your name to the list?

Tip: Consistency Is the Key

Once you’ve taken the time to develop all the critical pieces of the brand identity puzzle, including the name, logos, and tagline, ensure that the new message is consistent. This means including this core brand identity information in all company websites, newsletters, press releases, and even internal marketing materials. The goal is to have your customers hear the same brand message regardless of how they interact with your company. Ensure that all of your team members understand and truly believe in the company’s brand identity. Customers are smart and will sense a non-believer. And if your employees don’t believe the brand, neither will your customers.

If you’re not already convinced that an effective branding strategy is critical, please consider this. It is estimated that the average American is inundated with over 3,000 advertising messages each day. The human mind can only accept and process about 100 of these messages daily. Effective branding is the only chance your company has to stand out during this advertising overload. The sooner you understand and embrace this process, the better your chances for becoming one of the lucky 100.

]]>https://startupnation.com/start-your-business/plan-your-business/is-your-brand-ready-for-fame/feed/1210 Tips for Landing a Product Licensing Dealhttps://startupnation.com/start-your-business/launch-your-invention/10-tips-for-landing-a-product-licensing-deal/?utm_source=rss&utm_medium=rss&utm_campaign=10-tips-for-landing-a-product-licensing-deal
Fri, 22 Apr 2005 04:00:00 +0000http://smg.startupnation.com/articles/10-tips-for-landing-a-product-licensing-deal/Inventors can either build a new company to commercialize their product, or they can license their product to an existing company that already has the resources in place to get the product out into the market. This article offers 10 tips for how best to license a product to an existing company.

When you’ve got a great idea for a product, there’s an important decision to make right up front: do you want to build a brand new company from the ground up in order to commercialize the product, OR do you sign a product licensing deal with a pre-existing company that already has the resources in place in order to get your product out into the market?

If you choose the latter, and you’re successful in getting your product or invention licensed, you’ll receive royalties on sales of the product, and you’ll have a lot more time on your hands to tend to other activities in your life.

We know a thing or two about both commercializing and licensing products, having pursued them both on many occasions over the years. If you’re considering licensing an idea, be sober. Getting a company to license your invention from you is far from a simple task. The fact is, the rate of inventors who successfully license their inventions is very low—much less than 10%.

If seeing your product on the shelves is your dream, you not only have to have an appealing invention, but you also need to be an appealing inventor. Tenacity, preparation, and professionalism must become your hallmarks.

And we’re here to tell you that you can succeed. We’re proof positive! We were fortunate to successfully license our invention—“The Battery Buddy”—to a Fortune 500 company. And we generated upwards of a million dollars in royalties by doing so. From there we went on to help other inventors license their inventions to Fortune 500 companies in exchange for a share of any royalties generated.

Here are some things we learned along the way about trying to land a product licensing deal.

Know Your Stuff. First and foremost, to have any chance of licensing your invention, you must know your stuff. You have to become an expert in the field to which your invention applies. You should be able to rattle off who the competition is, what the potential market size is, what the projected demand for your product is, and why your product is the best to meet and satisfy that market demand.

Know the Downside. While it’s important to be passionate about your idea, it’s also important to be sober. Your credibility will be assessed by potential licensees partly based on whether you present a realistic analysis of the risks the licensee will have to deal with—things like product failure, the potential for slower-than-expected customer adoption, etc.

Present like a Pro. Information you present to potential licensees should be provided in written form and in a PowerPoint presentation. The information should include market research data, competitive analysis information, patent status and extent of coverage. It helps to provide a letter from your patent attorney summarizing the initial search results and any other pertinent opinions relating to the extent and value of the patent coverage awarded to you. Also include your product specifications, drawings, prototypes—even if they demonstrate only what the product looks like without the actual functionality. Add to this presentation your production cost estimates, testimonials you’ve collected, and any and all other materials that help demonstrate the potential your invention has in the marketplace.

Get it Protected. Big corporations usually have intellectual property or licensing departments specifically set up to handle and manage the inflow of product licensing opportunities. Most of these offices will not accept any submission of a licensing opportunity for which a patent has not yet been issued. And many will not sign a confidentiality agreement, while many others will require that only their own agreement be signed. In some cases, companies might be willing to sign your confidentiality agreement, but only rarely.

Submit Smart! Work closely with your intellectual property attorney when submitting an idea to a potential licensee to ensure that your idea is adequately protected. Never sign a confidentiality agreement without first having an attorney review it. And never turn over materials to a company without your attorney giving you the green light. It may be dangerous unless you have adequate patent protection in place or a confidentiality agreement that your attorney deems sufficient to protect your intellectual property.

Analyze Your Targeted Licensee. Always do research on the company you’re targeting prior to pitching them. Check to see if the potential licensee has the manufacturing and distribution capability you need already in place. If they do, their risk is mitigated to a substantial degree, and they will be much more likely to seriously consider the opportunity. Believe it or not, though, you may have to educate them on how your product can fit into their existing lines of business.

Don’t Reinvent Procedures. It’s important to follow the established protocol of a licensee when submitting your idea for consideration. If you attempt to bend the rules, your submission can be stopped dead in its tracks before ever being given consideration. If a targeted licensee has a licensing office, always start there to get a case file started at the company’s licensing office, and attend to their confidentiality procedures.

Find a Champion. Once you have clearance from the company to present your idea, always try to find a champion from within the company who gets excited about your idea and works to “pull” the idea into the company rather than you simply attempting to “push” the idea onto the company.

“No” is an Opportunity . Remember, it’s always safer for the company to say no to an idea than it is to say yes. The key is to be able to overcome the likely onslaught of negative responses the company will undoubtedly throw your way. It’s imperative—even in the midst of a no—that instead of hanging up or walking out in defeat, you ask to understand specifically why. If someone says no to you, that’s a perfect opportunity to learn. Immediately ask why? What are the concerns? Are they insurmountable? What could be done to address the concerns? You’ll use what you learn to create a yes! next time around.

Multiple Baskets. As the old saying goes, “don’t put all your eggs in one basket.” Relying on a single potential licensee just adds more risk to a challenge that already has plenty of inherent risk. It’s smart to approach more than one potential licensee to increase your odds for success. Further, playing multiple bidders off of each other can actually put some well-needed leverage on your side of the negotiating table by bringing out the competitive nature of the potential licensees. Ultimately, if you generate serious interest—and your aim is to license your invention to just one licensee—be sure you know when to stop playing competitors against each other. The moment you select your licensee, you’ll have to begin building good faith with them and you don’t want “bad blood” to tarnish how they perceive you and work with you in the long run.

Product Licensing: Our Bottom Line

While obtaining a license from a third party to produce and sell your product is very challenging, it can be done. And if you properly prepare and equip yourself for the challenge, you have a shot to have the dream of landing that product licensing deal, and collecting royalties while the licensee does all the work and takes all of the risk.